Fraudulent airline ticket purchases have occurred on all types of credit and charge card products and other payment vehicles since they were introduced in the industry as a form of payment. Unscrupulous individuals frequently utilize charge or credit cards belonging to other parties to make unauthorized purchases of airline tickets and services. These individuals cause substantial harm to merchants (such as airlines, travel agencies and online travel web sites) in the form of increased costs, because merchants are generally “charged back” for the cost of the ticket by the card issuer. Merchants are also harmed through loss of revenue since controls introduced to eliminate fraudulent transactions also cause some legitimate transactions to be refused. In addition, fraud generates additional operations costs related to processing charge backs and generates security risks by having these individuals utilizing airline services. Affected card members and other types of account holders are harmed since they must deal with the discomfort of realizing their cards or financial accounts were compromised, and must have their affected cards reissued. Financial institutions are harmed by the behavior of these individuals due in part to costs of processing charge backs, and also since they may be ultimately responsible for any fraudulent charges where proper merchant card acceptance procedures were followed. The occurrence of fraud on airline transactions also has negative impacts on the brand reputations of both the card and airline industries.
In order to combat this type of fraud, credit and charge card companies (collectively, card issuers) and other types of financial institutions (such as banks providing debit cards to account holders) have performed risk screening for all financial transactions in two general manners: (1) “real-time authorization” in which an authorization request is sent real time to the card issuer and only the specific behaviors of the card member and the merchant involved in a transaction are examined; and (2) “offline authorization” in which risky patterns are identified in a transaction after its completion, and an affected card member or account holder is contacted to verify a purchase. However, these measurements, while reducing the incidence of fraudulent transactions, leave in place a substantial residual level of fraud in the industry.
Currently, the transaction data provided by merchants to financial institutions for real-time authorization include only the purchase amount, vendor identification, credit card account number, credit card expiration date, and transaction date. Due to this limited data, a financial institution has limited modeling capabilities to protect themselves and airline vendors from fraudulent activity. Additional data is provided in the subsequent submission to the issuer however the delay between authorization and submission limits the ability of financial institutions to use this additional data to make optimized risk decisions in any given transaction.
Accordingly, there is a need for introducing fraud control measures in financial transaction processes that address the above-described problems with respect to timeliness of data availability and the shortcomings in existing and related technologies.